1. What is Credit Card Interest?

Credit card interest is the cost of borrowing money on your credit card. It's calculated based on your outstanding balance and the annual percentage rate (APR) set by your credit card issuer. Interest is typically charged when you carry a balance from month to month.

2. How Credit Card Interest is Calculated

The calculator uses the standard credit card interest formula:

Where:

• Balance — Your current credit card balance
• APR — Annual Percentage Rate (as a percentage)

Explanation: The APR is divided by 12 to get the monthly rate, which is then multiplied by your balance to determine the interest for that month.

3. Understanding APR

Details: APR represents the annual cost of borrowing, including interest and fees. Credit cards may have different APRs for purchases, cash advances, and balance transfers. The calculator assumes a single purchase APR for simplicity.

4. Using the Calculator

Tips: Enter your current credit card balance and the APR from your credit card agreement. The calculator will show how much interest you'll pay for one month if you don't pay off your balance.

5. Frequently Asked Questions (FAQ)

Q1: Is this the exact interest I'll be charged?
A: This is an estimate. Actual interest may vary based on your card's billing cycle, compounding method, and any grace periods.

Q2: How can I avoid paying interest?
A: Pay your full statement balance by the due date each month to avoid interest charges on purchases.

Q3: Why is my interest higher than this calculation?
A: Some cards use daily compounding or have different calculation methods. This calculator provides a simple monthly estimate.

Q4: Does this include fees?
A: No, this calculates only interest. Late fees, annual fees, or other charges are not included.

Q5: How can I reduce my interest payments?
A: Pay more than the minimum payment, transfer to a lower APR card, or negotiate with your issuer for a better rate.